SPOKANE, Wash., July 20, 2017 (GLOBE NEWSWIRE) -- Northwest Bancorporation, Inc. (OTC Pink:NBCT) (the “Company”), the holding company of Inland Northwest Bank (the “Bank” or “INB”), today reported financial results for the quarter ended June 30, 2017.
Net income for the second quarter of 2017 was $1.05 million, compared to $970 thousand for the previous quarter and $1.27 million for the second quarter of 2016. Earnings per diluted share increased 6.7%, from $0.15 for the first quarter of 2017, to $0.16 for the second quarter of 2017, but are down $0.04 from the second quarter of last year. Excluding nonrecurring acquisition expenses, quarterly earnings were down $132 thousand and $0.03 per diluted share compared to the second quarter of last year.
For the six months ended June 30, 2017, net income was $2.02 million, compared to $2.11 million for the corresponding period in 2016, representing a decrease of $90 thousand, or 4.3%. Earnings per diluted share decreased 3.1% year over year, from $0.32 for the first six months of 2016 to $0.31 for the first six months of 2017, but are up $0.01 from the previous quarter. Excluding nonrecurring acquisition expenses, year over year earnings for the first half of the year were down $240 thousand and $0.04 per diluted share.
Company President and CEO, Russell Lee, commented, “We are very pleased to see the strong loan growth which has been added to our balance sheet in the second quarter of 2017. Our de novo efforts in the Tri Cities market have exceeded our expectations and, combined with the growth in our more established Spokane and North Idaho markets, we have gained some momentum on the balance sheet after a somewhat slow start in the first quarter of 2017. While we stayed on our financial targets for the first half of 2017, we have also continued to invest in our franchise infrastructure and are in a good position to begin to integrate our second acquisition, CenterPointe Community Bank which closed late last week.”
Balance sheet
As of June 30, 2017, the Company had total assets of $639.7 million, compared to $641.7 million on March 31, 2017 and $594.0 million on June 30, 2016. This represents a decrease of $2.0 million, or 0.3% from the previous quarter and an increase of $45.7 million, or 7.7%, year over year.
The investment portfolio was $25.4 million as of June 30, 2017, down $2.1 million, or 7.5%, from $27.4 million at March 31, 2017. The net unrealized gain in the portfolio was $391 thousand, 15.3% higher than the $339 thousand net unrealized gain at March 31, 2017.
The net loan portfolio was $530.2 million on June 30, 2017. This represents an increase of $36.0 million, or 7.3%, from last quarter. Year over year, the net loan portfolio was up $51.1 million, or 10.7%.
Deposits at June 30, 2017 were $549.6 million, a decrease of $2.5 million, or 0.4%, compared to March 31, 2017 and an increase of $42.3 million, or 8.3%, compared to June 30, 2016. Noninterest bearing deposits were $166.0 million at quarter end, representing 30.2% of total deposits. This compares to noninterest bearing deposits of $162.3 million, or 29.4% of total deposits, at March 31, 2017, and to $141.4 million, or 27.9% of total deposits, at June 30, 2016.
Asset quality, provision and allowance for loan losses
The Bank’s nonperforming assets (“NPAs”) were $1.7 million at quarter end, representing 0.26% of total assets. NPAs are defined as loans on which the Bank has stopped accruing interest and includes foreclosed real estate. NPAs at the end of last quarter were $1.7 million, representing 0.26% of total assets, and at June 30, 2016, NPAs were $1.6 million, representing 0.27% of total assets.
The Bank had net loan charge-offs of $14 thousand and $109 thousand for the three and six-month periods ending on June 30, 2017, compared to net loan charge-offs of $62 thousand and $103 thousand for the comparable periods in 2016. The provision for loan losses was $253 thousand and $456 thousand for the three and six-month periods ending on June 30, 2017, compared to $121 thousand and $303 thousand for the comparable periods in 2016. As of June 30, 2017, the allowance for loan losses was $6.6 million, or 1.23% of gross loans; this was slightly higher than on March 31, 2017 when it was $6.4 million and represented 1.27% of the loan portfolio.
Capital
Shareholders’ equity increased $1.2 million, or 1.8%, during the second quarter of 2017, which was mostly related to earnings retention, partially offset by equity compensation expense. Tangible book value of the Company’s common stock was $9.49 per share on June 30, 2017, up $0.19, or 2.0%, over the $9.30 per share on March 31, 2017; year over year, tangible book value is up $0.76 per share, or 8.7%.
The Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under regulatory standards. As of June 30, 2017, the Bank’s Tier 1 leverage capital to average assets ratio was 11.3%, its common equity Tier 1 (“CET1”) capital ratio was 11.4%, and its total capital to risk-weighted assets ratio was 12.5%. The regulatory requirements to be considered “well-capitalized” for these three ratios are 5.0%, 6.5%, and 10.0%, respectively.
Total revenue
Total revenue was $7.7 million for the second quarter of 2017, representing an increase of $621 thousand, or 8.7%, from the previous quarter, and representing a increase of $349 thousand, or 4.7%, over the comparable quarter in 2016. Total revenue was $14.9 million for the first six months of 2017, compared to $14.5 million for the same period in 2016, representing an increase of $333 thousand, or 2.3%. Total revenue is defined as net interest income plus noninterest income.
Net interest income
Net interest income was $6.4 million for the quarter ended June 30, 2017, an increase of $341 thousand, or 5.6%, from the previous quarter and an increase of $154 thousand, or 2.5%, from the second quarter of 2016. Net interest income was $12.4 million for the six months ended June 30, 2017, an increase of $118 thousand, or 1.0%, from the comparable period in 2016. The net interest margin (interest income minus interest expense, divided by average earning assets) improved from 4.13% in the first quarter of 2017 to 4.37% in the second quarter of 2017. Year to date, the NIM was 4.25% compared to 4.44% last year through June; excluding net purchased loan discount accretion, the net interest margin was 4.15% and 4.27%, respectively.
Noninterest income
Noninterest income was $1.4 million during the second quarter of 2017, up $280 thousand, or 26.0%, from the previous quarter; this increase was related to higher revenues from sales of residential mortgage loans, higher debit and credit card interchange income and a $90 thousand recovery on an acquired written off loan. Noninterest income for the first six months of 2017 was $2.4 million, an increase of $215 thousand, or 9.7%, over the same period in 2016. This year over year increase in noninterest income was related to the same items discussed above.
Noninterest expense
Noninterest expense totaled $5.9 million for the second quarter of 2017, up $391 thousand, or 7.2%, from the previous quarter. Included in noninterest expense during the quarter were nonrecurring acquisition-related costs totaling $237 thousand as well as higher occupancy costs and higher loan related costs. Noninterest expense for the first six months of 2017 was $11.3 million, an increase of $195 thousand, or 1.8%, over the same period in 2016. While we experienced increases in employee and occupancy related costs, those were partially offset by decreases in FDIC assessments, acquisition related costs and other miscellaneous expenses.
Key ratios
Return on average assets (“ROA”) for second quarter 2017 was 0.66%, compared to 0.61% in the previous quarter and 0.85% in the second quarter last year. For the six-month periods ended June 30, 2017 and 2016, ROA was 0.64% and 0.70%, respectively. Excluding nonrecurring acquisition expenses, ROA would have been 0.76% and 0.69% for the three and six-month periods ended June 30, 2017, and 0.90% and 0.80% for the same periods in 2016. Return on average equity (“ROE”) was 6.23% for second quarter 2017, compared to 4.53% in the previous quarter and 4.93% for the second quarter last year. For the six-month periods ended June 30, 2017 and 2016, ROE was 6.03% and 6.82%, respectively. Excluding nonrecurring acquisition expenses, ROE would have been 7.15% and 6.49% for the three and six-month periods ended June 30, 2017 and 8.58% and 7.80% for the same periods in 2016.
CenterPointe Community Bank Acquisition
On July 14, 2017, the Company announced the closing of the acquisition of CenterPointe Community Bank, which was headquartered in Hood River, Oregon, and operated 4 branches. The combined Company has approximately $800 million in total assets. Barry Featherstone, former director with CenterPointe Community Bank, was appointed to the boards of directors of the Company and INB effective July 18, 2017.
About Northwest Bancorporation, Inc.
Northwest Bancorporation, Inc. is the parent company of Inland Northwest Bank, a state-chartered community bank which currently operates 21 offices across Washington, Idaho and Oregon. INB specializes in meeting the financial needs of individuals and small to medium-sized businesses, including professional corporations and agriculture-related operations, by providing a full line of commercial, retail, agricultural, and mortgage and private banking products and services. More information about INB can be found on its website at www.inb.com. The Company’s stock is quoted on the OTC Market’s Pink Marketplace, www.otcmarkets.com, under the symbol NBCT.
Forward-Looking Statements
This release contains forward-looking statements that are not historical facts and that are intended to be “forward-looking statements” as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Company’s future operating results. When used in this release, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions are generally intended to identify forward-looking statements. Actual results may differ materially from the results discussed in these forward-looking statements, because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. These include but are not limited to: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company’s loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Company’s loan and other products; unforeseen increases in costs and expenses; lower-than-expected revenue or cost savings in connection with acquisitions; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
| Northwest Bancorporation, Inc. | ||||||||
| Consolidated Statements of Financial Condition | ||||||||
| (Unaudited) | ||||||||
| Jun. 30, | Mar. 31, | Jun. 30, | ||||||
| (dollars in thousands) | 2017 | 2017 | 2016 | |||||
| Assets: | ||||||||
| Cash and due from banks | $ | 23,887 | $ | 21,715 | $ | 19,458 | ||
| Interest bearing deposits | 21,812 | 61,160 | 24,715 | |||||
| Time deposits held for investment | 3,920 | 4,640 | 2,862 | |||||
| Securities available for sale | 21,464 | 22,796 | 29,764 | |||||
| Federal Home Loan Bank stock, at cost | 1,036 | 1,050 | 1,061 | |||||
| Loans receivable, net | 530,169 | 494,210 | 479,098 | |||||
| Loans held for sale | 1,682 | 1,391 | 1,636 | |||||
| Premises and equipment, net | 14,690 | 13,967 | 14,108 | |||||
| Bank-owned life insurance | 7,113 | 7,084 | 6,999 | |||||
| Accrued interest receivable | 2,765 | 2,366 | 2,742 | |||||
| Goodwill | 6,206 | 6,206 | 6,290 | |||||
| Core deposit intangible | 1,167 | 1,214 | 1,378 | |||||
| Foreclosed real estate | 652 | 652 | 308 | |||||
| Other assets | 3,134 | 3,204 | 3,551 | |||||
| Total assets | $ | 639,697 | $ | 641,655 | $ | 593,970 | ||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Noninterest bearing deposits | $ | 166,023 | $ | 162,251 | $ | 141,408 | ||
| Interest bearing transaction and savings deposits | 271,385 | 275,953 | 249,226 | |||||
| Time deposits | 112,204 | 113,860 | 116,699 | |||||
| 549,612 | 552,064 | 507,333 | ||||||
| Accrued interest payable | 149 | 126 | 140 | |||||
| Borrowed funds | 17,877 | 18,222 | 19,257 | |||||
| Other liabilities | 3,740 | 4,123 | 3,945 | |||||
| Total liabilities | 571,378 | 574,535 | 530,675 | |||||
| Shareholders' equity: | ||||||||
| Common stock | 52,959 | 52,849 | 52,494 | |||||
| Retained earnings | 15,102 | 14,047 | 10,121 | |||||
| Accumulated other comprehensive income | 258 | 224 | 680 | |||||
| Total shareholders' equity | 68,319 | 67,120 | 63,295 | |||||
| Total liabilities and shareholders' equity | $ | 639,697 | $ | 641,655 | $ | 593,970 | ||
| Northwest Bancorporation, Inc. | ||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| Jun. 30, | Mar. 31, | Jun. 30, | Jun. 30, | Jun. 30, | ||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Interest and dividend income: | ||||||||||||||||||
| Loans receivable | $ | 6,654 | $ | 6,337 | $ | 6,514 | $ | 12,991 | $ | 12,836 | ||||||||
| Investment securities | 193 | 164 | 229 | 357 | 481 | |||||||||||||
| Other | 119 | 125 | 53 | 244 | 115 | |||||||||||||
| Total interest and dividend income | 6,966 | 6,626 | 6,796 | 13,592 | 13,432 | |||||||||||||
| Interest expense: | ||||||||||||||||||
| Deposits | 394 | 401 | 377 | 795 | 750 | |||||||||||||
| Borrowed funds | 187 | 181 | 188 | 368 | 371 | |||||||||||||
| Total interest expense | 581 | 582 | 565 | 1,163 | 1,121 | |||||||||||||
| Net interest income | 6,385 | 6,044 | 6,231 | 12,429 | 12,311 | |||||||||||||
| Provision for loan losses | 253 | 203 | 121 | 456 | 303 | |||||||||||||
| Noninterest income: | ||||||||||||||||||
| Service charges on deposits | 224 | 219 | 210 | 443 | 422 | |||||||||||||
| Gains from sale of loans, net | 387 | 277 | 335 | 664 | 560 | |||||||||||||
| Other noninterest income | 747 | 582 | 618 | 1,329 | 1,239 | |||||||||||||
| Total noninterest income | 1,358 | 1,078 | 1,163 | 2,436 | 2,221 | |||||||||||||
| Noninterest expense: | ||||||||||||||||||
| Salaries and employee benefits | 3,111 | 3,143 | 2,809 | 6,254 | 5,671 | |||||||||||||
| Occupancy and equipment | 520 | 432 | 409 | 952 | 850 | |||||||||||||
| Depreciation and amortization | 311 | 304 | 303 | 615 | 605 | |||||||||||||
| Advertising and promotion | 261 | 272 | 263 | 533 | 500 | |||||||||||||
| FDIC assessments | 59 | 45 | 91 | 104 | 194 | |||||||||||||
| Gain on foreclosed real estate, net | (9 | ) | (20 | ) | - | (29 | ) | - | ||||||||||
| Acquisition-related costs | 237 | - | 102 | 237 | 463 | |||||||||||||
| Other noninterest expense | 1,363 | 1,286 | 1,397 | 2,649 | 2,837 | |||||||||||||
| Total noninterest expense | 5,853 | 5,462 | 5,374 | 11,315 | 11,120 | |||||||||||||
| Income before income taxes | 1,637 | 1,457 | 1,899 | 3,094 | 3,109 | |||||||||||||
| Income tax expense | 583 | 487 | 624 | 1,070 | 995 | |||||||||||||
| NET INCOME | $ | 1,054 | $ | 970 | $ | 1,275 | $ | 2,024 | $ | 2,114 | ||||||||
| Earnings per common share - basic | $ | 0.16 | $ | 0.15 | $ | 0.20 | $ | 0.32 | $ | 0.33 | ||||||||
| Earnings per common share - diluted | $ | 0.16 | $ | 0.15 | $ | 0.20 | $ | 0.31 | $ | 0.32 | ||||||||
| Weighted average common shares outstanding - basic | 6,423,845 | 6,420,161 | 6,369,282 | 6,422,013 | 6,369,040 | |||||||||||||
| Weighted average common shares outstanding - diluted | 6,618,430 | 6,594,681 | 6,509,374 | 6,606,317 | 6,505,918 | |||||||||||||
| Northwest Bancorporation, Inc. | ||||||||||||||||||||||||||
| Key Financial Ratios and Data | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| Jun. 30, | Mar. 31, | Jun. 30, | Jun. 30, | Jun. 30, | ||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| PERFORMANCE RATIOS (annualized) | ||||||||||||||||||||||||||
| Return on average assets | 0.66 | % | 0.61 | % | 0.85 | % | 0.64 | % | 0.70 | % | ||||||||||||||||
| Return on average equity | 6.23 | % | 5.83 | % | 8.15 | % | 6.03 | % | 6.82 | % | ||||||||||||||||
| Yield on earning assets | 4.77 | % | 4.53 | % | 4.93 | % | 4.65 | % | 4.84 | % | ||||||||||||||||
| Cost of funds | 0.58 | % | 0.58 | % | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||||||||
| Net interest margin | 4.37 | % | 4.13 | % | 4.52 | % | 4.25 | % | 4.44 | % | ||||||||||||||||
| Noninterest income to average assets | 0.86 | % | 0.68 | % | 0.78 | % | 0.77 | % | 0.74 | % | ||||||||||||||||
| Noninterest expense to average assets | 3.69 | % | 3.44 | % | 3.59 | % | 3.56 | % | 3.69 | % | ||||||||||||||||
| Provision expense to average assets | 0.16 | % | 0.13 | % | 0.08 | % | 0.14 | % | 0.10 | % | ||||||||||||||||
| Efficiency ratio (1) | 75.6 | % | 76.7 | % | 72.7 | % | 76.1 | % | 76.5 | % | ||||||||||||||||
| Jun. 30, | Mar. 31, | Jun. 30, | ||||||||||||||||||||||||
| 2017 | 2017 | 2016 | ||||||||||||||||||||||||
| ASSET QUALITY RATIOS AND DATA | ||||||||||||||||||||||||||
| Nonaccrual loans | $ | 1,002 | $ | 1,004 | $ | 1,278 | ||||||||||||||||||||
| Foreclosed real estate | $ | 652 | $ | 652 | $ | 308 | ||||||||||||||||||||
| Nonperforming assets | $ | 1,654 | $ | 1,656 | $ | 1,586 | ||||||||||||||||||||
| Loans 30-89 days past due and on accrual | $ | 1,838 | $ | 469 | $ | 186 | ||||||||||||||||||||
| Restructured loans | $ | 2,342 | $ | 3,203 | $ | 4,837 | ||||||||||||||||||||
| Allowance for loan losses | $ | 6,611 | $ | 6,372 | $ | 6,224 | ||||||||||||||||||||
| Nonperforming assets to total assets | 0.26 | % | 0.26 | % | 0.27 | % | ||||||||||||||||||||
| Allowance for loan losses to total loans | 1.23 | % | 1.27 | % | 1.28 | % | ||||||||||||||||||||
| Allowance for loan losses to nonaccrual loans | 659.8 | % | 634.7 | % | 487.0 | % | ||||||||||||||||||||
| Net charge-offs | $ | 14 | (2 | ) | $ | 95 | (2 | ) | $ | 62 | (2 | ) | $ | 109 | (3 | ) | $ | 103 | (3 | ) | ||||||
| Net charge-offs to average loans (annualized) | 0.03 | % | (2 | ) | 0.23 | % | (2 | ) | 0.15 | % | (2 | ) | 0.02 | % | (3 | ) | 0.02 | % | (3 | ) | ||||||
| CAPITAL RATIOS AND DATA | ||||||||||||||||||||||||||
| Common shares outstanding at period end | 6,425,361 | 6,421,361 | 6,370,798 | |||||||||||||||||||||||
| Tangible common equity | $ | 60,946 | $ | 59,700 | $ | 55,627 | ||||||||||||||||||||
| Tangible book value per common share | $ | 9.49 | $ | 9.30 | $ | 8.73 | ||||||||||||||||||||
| Shareholders' equity to total assets | 10.7 | % | 10.5 | % | 10.7 | % | ||||||||||||||||||||
| Total capital to risk-weighted assets (3) | 12.5 | % | 13.0 | % | 12.6 | % | ||||||||||||||||||||
| Tier 1 capital to risk-weighted assets (3) | 11.4 | % | 11.8 | % | 11.5 | % | ||||||||||||||||||||
| Tier 1 common equity ratio (3) | 11.4 | % | 11.8 | % | 11.5 | % | ||||||||||||||||||||
| Tier 1 leverage capital ratio (3) | 11.3 | % | 11.1 | % | 11.0 | % | ||||||||||||||||||||
| DEPOSIT RATIOS AND DATA | ||||||||||||||||||||||||||
| Core deposits (4) | $ | 437,408 | $ | 438,204 | $ | 390,634 | ||||||||||||||||||||
| Core deposits to total deposits | 79.6 | % | 79.4 | % | 77.0 | % | ||||||||||||||||||||
| Noninterest bearing deposits to total deposits | 30.2 | % | 29.4 | % | 27.9 | % | ||||||||||||||||||||
| Net loan to deposit ratio | 96.5 | % | 89.5 | % | 94.4 | % | ||||||||||||||||||||
| Notes: | ||||||||||||||||||||||||||
| (1) Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income). | ||||||||||||||||||||||||||
| (2) Net charge-offs for the three-month period. | ||||||||||||||||||||||||||
| (3) Regulatory capital ratios are reported for Inland Northwest Bank. | ||||||||||||||||||||||||||
| (4) Core deposits include all deposits except time deposits. | ||||||||||||||||||||||||||